Boeing Co's defence business expects moderate growth in revenue next year after relatively flat results in 2010, said Dennis Muilenburg, president of Boeing Defence, Space and Security.
Boeing's defence revenue would be bolstered by international sales of existing planes, as well as expansion into adjacent markets such as unmanned vehicles, offsetting the loss of several big Boeing programs cancelled by the Pentagon last year, Muilenburg said ahead of the Farnborough Airshow.
The company is also locked in fierce competition with Europe's EADS and a team including Ukraine's Antonov, to build 179 refuelling tankers for the US Air Force. The competition is worth up to $50 billion, and the Pentagon is expecting to award a contract sometime this fall.
He said nine acquisitions in recent years, rotorcraft sales, and international arms sales had all helped to offset the loss of the Future Combat Systems Army modernisation program and some missile defence programs that were cancelled or scaled down by Defence Secretary Robert Gates last year.
Boeing strongly supported the Pentagon's drive to lower overhead costs in weapons programs, and had been aiming to trim fat from its programs for years, Muilenburg said. But he expressed concern about declining Pentagon investment in research and development of future weapons programs.
For now, Boeing and other companies were funding research on their own to keep advanced design teams working, but at some point that would no longer be sustainable, said Chris Raymond, Boeing's vice president for business development.
Twenty years ago the aerospace and defence sector had more than 10 new development programs at any given time, but that number had dwindled to just over a handful during the last decade, and the flow was now down to one or two, Muilenburg said.
That made it tough to recruit new talent and posed a "real challenge" to the industry, he added. Muilenburg said reforms of cumbersome US export regulations were also sorely needed to help support the growing importance of exports. Given flat US defence budgets, Boeing's goal was to expand international sales to make up about 25 percent of defence revenues, up from 16 percent currently, he said.
But the overall split of commercial and military revenues would remain around 50-50 with the larger Boeing company.
Mark Kronenberg, vice president of international business development, cited strong overseas demand for the C-17 cargo plane, and said Boeing expected to sell about 30 more of the troop- and cargo-transporters in the next five years.